Components of Political Environment | Political Environment

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Components of Political Environment | Political Environment

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Constitution (Political Structure)

The constitution is the fundamental law of the country. Any law inconsistent with it is void. It is the duty of every citizen to follow the constitution. It affects the development of business in the country directly.
Nepal was ruled through the interim constitution from 2007 to 2015. After the people’s movement of 2006, the armed revolution by the Maoists ended and Nepal entered into a new era. The interim constitution 2007 was formulated and promulgated on the basis of the common minimum programs singed by the eight political parties involving Nepali Congress, Communist Party of Nepal- United Marxist and Leninist (CPN-UML) and United Communist Party of Nepal- Maoist (UCPN-M).

The interim constitution which was adopted on January 15, 2007, announced the abolition of the monarchy. It was implemented only from May 27, 2008, after the first meeting of the constituent assembly.

The Constitution of Nepal, 2072 was endorsed on September 16, 2015, by the Constituent Assembly meeting by more than two-thirds majority. It states Nepal as a federal democratic republican nation. It has 35 parts and 308 articles. The main goal Of this constitution is to gain sustainable peace, good governance, development and prosperity through the federal democratic republican system.

Directive Principles of the State

The Constitution of Nepal, 2072 states the following directive principles of the state.

  1. The political objective of the state is to establish a federal democratic republican system to ensure the use of democratic rights by keeping sovereignty, independence, and integrity at the highest level.
  2. The socio-cultural objective of the state is to end all forms of discrimination, exploitation, and injustice based on religion, culture, custom, tradition, and usage by respecting cultural diversity.
  3. The economic objective of the state is to develop sustainably through equitable distribution of resources and promote the participation of the public, cooperative and private sectors.
  4. The international relations of the state are directed towards enhancing the dignity of the nation in the international arena.

State Policies

State policies provide guidelines for the development of different sectors of the state. Some of the state policies which have a high bearing on the growth and development of business in the country are mentioned below.

Related to Economy and Commerce

  • To enhance the national economy through partnership and independent development of the public, private and cooperative sectors,
  • To achieve economic prosperity by way of optimum mobilization of the available means and resources, while focusing on the role of the private sector in the economy,
  • To promote the cooperative sector and mobilize it in national development to the maximum extent;
  • To encourage and mobilize the economic sector in the overall national development, while providing for regulation to maintain fairness, accountability, and competition in all of its activities,
  • To make an equitable distribution of the available means and resources and benefits of economic development,
  • TO diversify and expand markets for goods and services, while promoting exports through development and expansion of industries upon identifying areas of comparative advantage,
  • To protect the interests of consumers by maintaining trade fairness and discipline by making the national economy competitive, while ending activities such as creating black marketing, monopoly, artificial scarcity, and restricting competition,
  • To protect and promote domestic industries and resources and accord priority to domestic investment based on Nepalese labor, skills, and raw materials for the development of the national economy,
  • To give priority to domestic investment for the development of the national economy,
  • To encourage foreign capital and technological investment in areas of import substitution and export promotion, in consonance with the national interest, and encourage and mobilize such investment in infrastructure building,
  • To make the obtaining of foreign assistance transparent, while making the assistance,
  • national needs and priorities as the basis for obtaining foreign and incorporating amounts received in form of foreign assistance in the national budget,
  • To utilize knowledge, skill, technology and capital of the non-resident
  • Nepalese in the national development,
  • To give dynamism to the economic development by establishing coordination “between the States and the States and the Federation in relation to industrial corridors, special economic zones, national projects and projects involving foreign investment.

Related to Labour and Employment

  • To make competent and professional the labour force that has remained as the main Socio-economic strength of the country and enhance employment within the country, while ensuring a situation enabling all to work,
  • To guarantee social security, while ensuring the basic rights of all labours, in consonance with the concept of decent labour,
  • To abolish all forms of labour exploitation including child labour,
  • To encourage the participation of laborers in management, while maintaining cordial relations between the laborers and entrepreneurs,
  • To regulate and manage the sector in order to make foreign employment free from exploitation, safe and systematic, and to guarantee employment and rights of the laborers,
  • To encourage to mobilize the capital, skills, technology and experience gained from foreign employment in productive sectors in the country.

Fundamental Rights

1. Right to live with dignity      
2. Right to freedom
3. Right to equality                 
4. Right to communication
5. Right relating to justice 
6. Right of the victim of crime
7 Right against torture 
8. Right against preventive detention
9. Right against untouchability and discrimination
10. Right relating to the property 
11. Right to freedom of religion
12. Right to information 
13. Right to privacy
14. Right against exploitation 
15. Right to a clean environment
16. Right relating to education 
17. Right to language and culture
18. Right to employment 
19. Right to labor
20. Right relating to health 
21. Right relating to food
22. Right to housing 
23. Rights of women
24. Right of child 
25. Right of Dalits
26. Right of senior citizens 
27. Right to social justice
28. Right to social security 
29. Rights of consumers
30. Right against exile 
31. Right to constitutional remedies

The Constitution of Nepal 2072 has ensured the right to property which is a motivating factor for the private sector. Similarly, it has regarded the private sector as a pillar of economic development. The state policies as the development of the agriculture sector as an industry, priority to the development of science and technology, and attracting foreign capital and technology are encouraging for the development of the business sector in the country. Likewise, the state principles of transforming the national economy into an independent and self-reliant economy are positive towards the development of business in Nepal.

However, there has been a criticism of this constitution. Proponents of a free-market economy are suspicious as the constitution mentions developing socialism oriented economy. Similarly, the private sector is not happy to identify the co-operative sector as one of the pillars of the economy.

Political Parties

Political parties are regarded as the pillars of the democratic system. They try to win the support of the people to elect their representatives and form legislation. Through legislation, they attempt to form government and rule the nation according to their ideology and policies.

The number of political parties in Nepal has grown tremendously over the years. The major political parties are Nepali Congress, Communist Party of Nepal (Unified-Marxist-Leninist), Communist Party of Nepal (Maoist Centre), Madhesi jana Adhikar Forum- Nepal, Rastriya Janta Party, Rastriya Prajatantra Party, etc.

The Political Parties in Nepal are foung to have divided even in the matters of national interest. They are not found to be working towards establishment of a democratic political culture. Groupism within the party is common. They are found to split off for even minor issues. Individualism is pervasive in Nepalese political parties. Ideologies are not dominant.

Government and Its Branches


Legislative is formed by the representatives of the people. It is also called the parliament. Its main responsibility is the formulation and enactment of the law. It also forms the executive i.e. the government. Under the parliamentary system of government, the legislative exercise its immediate and direct control over the executive. It acts as the guardian of the national treasury. It decides the tax be imposed on the individual as well businesses. It is the supreme organ of the state. 

According to the Constitution of Nepal, 2072, the legislature of Nepal is divided into three levels

1. Federal legislature: 

It is the legislature at the central level. It consists of two houses, namely the House of Representatives and the National Assembly. 
The House of Representatives consists of two hundred and seventy-five members. One hundred and sixty-five members are elected directly from each election constituency. One hundred and ten members are elected through the proportional electoral system.
The National Assembly is a permanent house. One-third of its members retire every two years. The number of members is fifty-nine.

2. State legislature: 

The legislature of a State will be unicameral, which is called the State Assembly.

3. Local legislature: 

The legislative powers of the local level shall be vested in the Village Assembly and the Municipal Assembly. They can make laws on some specified matters.


It refers to the organ of the state that is responsible for the overall administration of the nation. It is composed of the government and its organs as bureaucracy, army, and police. It also refers to the local governments as District Assembly, Municipality, and Village Body. It is responsible for enacting the laws and rules formulated by the legislature. Currently, elections for local government were held in Nepal.
This present government is regarded as liberal towards the development Of trade and industry in the country.

The executive of Nepal, according to the Constitution of Nepal 2072, consists of the following.

  • Federal government: It is the central government. The form of governance will be a multiparty competitive federal democratic republican parliamentary system based on pluralism. The Council of Ministers led by the Prime Minister has the executive power of Nepal. It is responsible for issuing general directives, controlling and regulating the administration.
  • State government: The executive power of the state shall be inherent in the council of ministers of the state led by the chief of state.
  • Local government: The executive powers of the local level are vested in the Village Executive or the Municipal Executive.

The federation, states and local units should protect and preserve Nepal’s sovereignty, national unity, integrity, independence, national interest, overall development, federal democratic republic multiparty system of governance, human rights and fundamental rights, rule of law, separation of power, control and balance, an equitable society based on pluralism and equality, inclusive representation and identity.


It refers to the court of law. It is responsible for settling disputes and interpreting the rules and laws if required. In other words, it has the right of judicial review under the constitution. It serves as the watchdog of law and constitution.

The judiciary of Nepal is committed to this constitution by recognizing the concept, norms and values of the independent judiciary and the spirit of democracy.

Nepal’s judiciary is legally separated from the executive and legislative branches. It has increasingly shown the will to be independent of political influence.
According to the Constitution of Nepal 2072, the following courts will remain in Nepal:

1. Supreme Court: 

The Supreme Court is a court of record. All courts and judicial bodies, except as otherwise provided in this Constitution, are under the Supreme Court. It has the final authority to interpret this constitution and laws.

2. High Court: 

There shall be one High court in each state.

3. District Court: 

There shall be one district court in each district. It has jurisdiction over local level cases.

4. Specialized Courts: 

They are established for the purpose of hearing special types of cases. They may be judicial bodies or tribunals.

Other Constitutional Bodies

The following are the constitutional bodies in Nepal according to the Constitution of Nepal, 2072.

1. Commission for the Investigation of Abuse of Authority: 

Its main function is to conduct inquiries and investigations of improper conduct or corruption by a person holding any public office. Its main objective is to minimize and remove corruption and abuse of authority by the people holding public positions.

2. Auditor-General: 

The Auditor-General audits the accounts of the Supreme Court, the Constitutional Court, the Federal Parliament, Provincial Assembly, Provincial Government, Constitutional Entities or their offices, Office of the Attorney General, the Nepal Army, Armed Police, Nepal Police as well as of all other government offices and courts. Auditing is done in the manner determined by law, with due consideration given to the regularity, economy, efficiency,

3. Public Service Commission: 

The main duty of the Federal Public Service Commission is to conduct examinations for the selection of suitable candidates to be appointed to Civil Service posts.

4. Election Commission: 

The Election Commission conducts, supervises, directs, and controls the election of President, Vice-President, House of Representatives, National Assembly, State Assemblies, and local units and referendum.

5. National Human Rights Commission: 

The duties of the National Human Rights Commission are to ensure the respect for, protection, and promotion of human rights and their effective implementation.

6. National Natural Resources and Fiscal Commission: 

The main duties of the National Natural Resources and Fiscal Commission are to determine the detailed basis and mechanism of distributing the revenues from Federal Consolidated Fund among federation, states, and local units and recommend the equalization grant to states and local units as per the law and ways of improving expenditure management and tax collection to a federation, states, and local units.

7. Other Commissions

a. National Women Commission: 

Its main duties are to formulate and submit the policies and plans of the Government of Nepal related to women rights and issues for implementation before the Government of Nepal and study and analyze the legal provisions on gender equality, women empowerment, and other women related laws and recommend the concerned authorities for improvement and monitor the improvement.

b. National Dalit Commission: 

It identifies and recommends different issues to be studied and researched related to Dalits and prepares national policy and program to for ending the discrimination on the basis of caste, creed, suppression, and for the development of the Dalit community.

c. National Inclusion Commission: 

The main duties of the National Inclusion Commission are to identify and recommend different issues to be studied and researched related to protection, empowerment, or advancement of economically poor, socially, or culturally backward sectors and to study and analyze the legal provisions and laws related to the communities and recommend the concerned authorities for improvement and monitor the improvement.

d. Indigenous Nationalities, Madhesi, Tharu and Muslim Commissions: 

The functions, duties, and powers of these Commissions shall as provided for in the Federal law.

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